AREVALO et al v. MARTINEZ et al

Filing 99

ORDER granting in part and denying in part 74 Motion to Dismiss for Failure to State a Claim; adopting in part Report and Recommendations 95 ; granting 97 Motion for Extension of Time to File Response/Reply to Report and Recommendations. Signed by Judge Sheryl H. Lipman on 10/29/2014. (Lipman, Sheryl)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION
RUBEN GUEVARA, et al.,
Plaintiffs,
v.
UMH PROPERTIES, INC., et al.,
Defendants.

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No. 2:11-cv-2339-SHL-tmp

ORDER ADOPTING IN PART AND REJECTING IN PART THE
RECOMMENDATION; ADOPTING THE REPORT; GRANTING IN PART AND
DENYING IN PART DEFENDANT’S MOTION TO DISMISS

Before the Court is the Magistrate Judge’s Report and Recommendation on Defendants’
Motion to Dismiss (the “Report and Recommendation”), filed on August 21, 2014. (ECF
No. 95.) In the Report and Recommendation, the Magistrate Judge recommended that
Defendant’s Motion to Dismiss be granted as to Plaintiff’s claims under the common law
warranty of habitability, intentional misrepresentation (except Plaintiff Guevara’s claim,) and the
Tennessee Consumer Protection Act (except Plaintiff Guevara’s claim). The Magistrate Judge
recommended that Defendant’s Motion to Dismiss be denied as to all other claims.
Defendants filed objections to the Report and Recommendation on September 4, 2014.
(ECF No. 96.) Plaintiffs filed a response to Defendants’ objections on September 29, 2014.1
(ECF No. 98.)
For the reasons stated below, the Court ADOPTS the factual findings in the Report and
ADOPTS IN PART and REJECTS IN PART the conclusions of law. Accordingly, Defendant’s
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This response was not filed within the deadlines, however, the late filing was not opposed and
did not impede the administration of the case or prejudice either party, therefore Plaintiffs’
Motion for Extension of Time to File Response (ECF No. 97) is GRANTED and the Court
accepts the response filed on September 29, 2014 (ECF No. 98) as Plaintiff’s objections.

Motion to Dismiss (ECF No. 74) is hereby GRANTED as to Counts V, VI, and VII, and IX
(except as to Plaintiff Guevara) and DENIED as to Counts I, II, III, IV, VIII, and IX (as to
Plaintiff Guevara only).
BACKGROUND
For the purposes of Defendants’ Motion to Dismiss, the Court adopts the Magistrate
Judge’s proposed findings of fact as laid out in the Report and Recommendation, to which
neither party objected.
The Plaintiffs in this action are all residents of Memphis Mobile City (“MMC”), a
manufactured housing community that was either owned by or a subsidiary of Defendant UMH
Properties, Inc. Plaintiffs are of Hispanic descent, as were almost all of the residents in MMC.
Many of these residents have limited English proficiency. Defendants are the owners and
managers of MMC. The Plaintiffs did not purchase their mobile homes directly from
Defendants, but assumed the Retail Installment Contract and Security Agreements (“RISCs”) of
a prior owner, either financing their mobile home through a “straw man” at the coaching of
Defendant Gail Whitten (who was the manager of MMC and an employee or agent of UMH
Properties, Inc.), or purchasing a mobile home with cash.
On May 1, 2010, a major flood hit Memphis and flood water rose up to nine feet within
the mobile home park, necessitating coordinated rescue efforts by workers who used motor boats
to evacuate residents who were stranded in high water and causing massive damage to the
property of Plaintiffs and others at the mobile home park. The mobile home park is in a
designated flood plain and has experienced serious flooding problems over the years. There
were major floods in the park in 1987 and 1995, and many less severe ones in between.

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On May 2, 2011, Plaintiffs brought this putative class action seeking declaratory
judgment, permanent injunctive relief, and damages for discrimination in housing on the basis of
national origin. This action is brought under the Fair Housing Act of 1968 (“FHA”), as
amended, 42 U.S.C. §§ 3601 et seq., and the Tennessee Human Rights Act (“THRA”), as
amended, Tenn. Code Ann. § 4-21-601 et seq. Plaintiffs also bring the action for violations of
the Tennessee Consumer Protection Act (“TCPA”), Tenn. Code Ann. § 47-18-101 et seq.; breach
of the common law duty to disclose a latent defect; breach of the common law warranty of
habitability; violations of the Tennessee Uniform Residential Landlord and Tenant Act
(“TURLTA”), Tenn. Code Ann. § 66-28-101, et seq.; fraud in the inducement of contract; fraud
in the inducement of an arbitration agreement; breach of contract; intentional misrepresentation;
and conversion. Defendants moved to stay the proceedings and require the Plaintiffs to arbitrate
their claims because of arbitration clauses in the RISCs signed by many of the Plaintiffs. The
Court required nineteen Plaintiffs to arbitrate, but allowed the case to continue as to ten
remaining Plaintiffs.
On September 25, 2013, Defendants filed a motion to dismiss all claims in Plaintiffs’
Amended Complaint with prejudice, pursuant to Federal Rules of Civil Procedure 12(b)(6) and
9(b). On August 21, 2014, the Magistrate Judge issued a Report and Recommendation on this
motion. The Magistrate Judge recommended that Defendant’s Motion to Dismiss be granted as
to Plaintiff’s claims under the common law warranty of habitability, intentional
misrepresentation (except Plaintiff Guevara’s claim,) and the Tennessee Consumer Protection
Act (except Plaintiff Guevara’s claim).
STANDARD OF REVIEW
Pursuant to federal statute,

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[a] judge of the court shall make a de novo determination of those portions of the report
or specified proposed findings or recommendations to which objection is made. A judge
of the court may accept, reject, or modify, in whole or in part, the findings or
recommendations made by the magistrate judge. The judge may also receive further
evidence or recommit the matter to the magistrate judge with instructions.
28 U.S.C. § 636(b) (2006); accord Fed. R. Civ. P. 72(b)(3). The portions of the Report and
Recommendation to which no objections were timely filed are reviewed for clear error. See Fed.
R. Civ. P. 72(b) advisory committee notes (1983 Addition), Subdivision (b).
Defendants argue that Plaintiffs failed to state a claim upon which relief can be granted.
Federal Rule of Procedure 12(b)(6) requires that a plaintiff provide enough facts to state a claim
for relief that is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127
S.Ct. 1955, 167 L.Ed.2d 929 (2007). A complaint must “contain either direct or inferential
allegations respecting all the material elements to sustain a recovery under some viable legal
theory.” Indiana State Dist. Council of Laborers & HOD Carriers Pension & Welfare Fund v.
Omnicare, Inc., 719 F.3d 498, 502 (6th Cir. 2013), cert. granted, 134 S. Ct. 1490, 188 L. Ed. 2d
374 (U.S. 2014) (quoting Mezibov v. Allen, 411 F.3d 712, 716 (6th Cir. 2005)). “While
plausibility requires relief to be more than speculative, it need not be probable; rather, ‘a wellpleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is
improbable, and that recovery is very remote and unlikely.'” Montesi v. Nationwide Mut. Ins.
Co., 2013 WL 4522905, *2 (W.D. Tenn. 2013) (quoting Erie County, Ohio v. Morton Salt, Inc.,
702 F.3d 860, 867 (6th Cir. 2012)). While this is a liberal standard, a plaintiff must still state
factual matter that, if true, would plausibly state a claim; mere conclusory allegations will not
suffice and the Court need not accept as true legal conclusions or unwarranted factual inferences.
Twombly, 550 U.S. 544 at 557; Gregory v. Shelby Cnty., 220 F.3d 433, 446 (6th Cir. 2000). In
any complaint averring fraud or mistake, “the circumstances constituting fraud or mistake shall

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be stated with particularity.” Fed. R. Civ. P. 9(b). “The Plaintiffs must plead more than a
generalized grievance against a collective group of Defendants in order to meet the requirements
of FRCP 9(b).” Masterson v. Meade Cnty. Fiscal Court, 489 F. Supp. 2d 740, 749 (W.D. Ky.
2007).
ANALYSIS
A.

FHA & THRA Claims

Plaintiffs allege that Defendants specifically targeted them for exploitative and
discriminatory housing practices because of their national origin in violation of the Fair Housing
Act (specifically 42 U.S.C. § 3604(b) and § 3604(c)) and the Tennessee Human Rights Act
(specifically Tenn. Code Ann. § 4-21-601(2) and § 4-21-601(5)). Tennessee courts have held
that the legislature intended the Tennessee Human Rights Act to be coextensive with federal civil
rights laws, and the Tennessee Supreme Court looks to federal interpretation for guidance in
interpreting the THRA. See Parker v. Warren Cnty. Util. Dist., 2 S.W.3d 170, 172 (Tenn. 1999).
Thus, the analysis is identical for housing discrimination claims under both the FHA and the
THRA.
1.

§ 3604(b) and §4-21-601(2)

The Fair Housing Act and Tennessee Human Rights Act both prohibit discrimination in
the terms, conditions, and privileges of housing or in the provision or services in connection
therewith on the basis of race, color, religion, sex, familial status, or national origin. 42 U.S.C. §
6404(b); Tenn. Code Ann. § 4-21-601(2). A plaintiff is only required to provide a short and
plain statement of the claim that gives the defendant fair notice of what the plaintiff’s claim is
and the grounds upon which it rests in order to withstand a motion to dismiss a § 3604(b) claim
and is not required to allege every element of a prima facie case. Dickinson v. Zanesville

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Metro. Hous. Auth., 975 F. Supp. 2d 863, 870-72 (S.D. Ohio 2013). Under this standard, a
plaintiff need allege only the statutory basis for their claims, and the factual predicate of those
claims, such that the defendants are apprised of the claims and the grounds upon which they rest.
Id.
The Magistrate Judge held that Plaintiffs set forth the statutory bases for their claims and
outlined the factual details supporting the allegations of Defendant’s misconduct in the following
ways:
1. Failing to register mobile homes in the names of buyers in spite of the fact that
they were charged fees for titling, leaving them with no badge of ownership but
all the responsibilities attendant thereto (Am. Compl. ¶¶ 338-55);
2. Improperly requiring residents to pay all of the property taxes associated with lots
(even taxes that accrued prior to their residency), rather than only the increased
taxes for affixing “their” mobile home to the land (Am. Compl. ¶¶ 129-34; 15761);
3. Shifting all the burden for maintaining and insuring the mobile homes to the
resident, even though their “ownership” rights were very tenuous in many
instances because they had no formal badge of ownership of the mobile homes
(Am. Compl. ¶¶ 266, 316, 405);
4. Frequently and arbitrarily raising the rent on the pads on which the mobile homes
sat (Am. Compl. ¶¶ 204-06, 230);
5. Creating “ridiculous contrivances” to prevent Guevara from moving his mobile
home (Am. Compl. ¶¶ 154-69);
6. Cursing Guevara in front of his family (Am. Compl. ¶¶ 171-72);
7. Calling police on Martinez and other Hispanic residents when they went
peacefully to the mobile home park office after the flood and threatening to call
immigration authorities (Am. Compl. ¶ 211);
8. Threatening Nava with criminal prosecution and deportation, and calling the
police on him in retaliation for his attempts to move his mobile home (Am.
Compl. ¶¶ 251-52);
9. Threatening unwarranted criminal action against Nevarez (Am. Compl. ¶ 300);
and,
10. Cursing Angeles in front of his wife and children and threatening criminal action
and deportation against him (Am. Compl. ¶¶ 362-63).
(ECF No. 95 at 8-9).
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Defendants do not dispute that Plaintiffs have stated a claim under § 3604(b), but
argue that some of these claims should be dismissed because the alleged mistreatment
occurred after Plaintiffs had obtained housing. There is disagreement amongst the
Circuit Courts of Appeal as to whether post-access activity is actionable under § 3604(b)
and the Sixth Circuit has not addressed this issue.2 Compare Cox v. City of Dallas, Tex.,
430 F.3d 734 (5th Cir. 2005) (finding that FHA prohibited discrimination relating to the
initial sale or rental of a dwelling), with Comm. Concerning Cmty. Improvement v. City
of Modesto, 583 F.3d 690 (9th Cir. 2009) (finding that FHA reaches post-acquisition
discrimination). Magistrate Judge Pham concluded that it was not necessary to resolve
this circuit split because at least some of the alleged mistreatment of Plaintiffs occurred
prior to the Plaintiffs obtaining housing. (ECF No. 95 at 10.) The Court disagrees. The
time to dispose of allegations that fail to state a claim is during a 12(b)(6) motion,
therefore it must be determined which of Plaintiffs’ FHA claims are cognizable in order
to properly rule on the instant Motion.
The proper starting point to determine the intended scope of the FHA is the
language of the statute. See Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 739
(1989) (“The starting point for [the] interpretation of a statute is always its language.”);
see also Conn. Nat’l Bank v. Germain, 503 U.S. 249, 253-54 (1992) (noting that “courts
must presume that a legislature says in a statute what it means and means in a statute
what it says there”). Defendant argues that § 3604(b) only applies to claims related to
access to housing. Section 3604(b) makes it unlawful to discriminate against any person

2

The Sixth Circuit has, however, held that § 3617 of the FHA (prohibiting intimidation and
harassment of those who exercise their rights under the FHA) does apply to post-access conduct.
See Hidden Village, LLC v. City of Lakewood, Ohio, 734 F.3d 519, 528-30 (6th Cir. 2013).
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“in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision
of services or facilities in connection therewith . . .” on the basis of a protected
characteristic.
The phrase “in connection therewith” is arguably ambiguous; the statute could be
read broadly to protect against discrimination in the provision of services or facilities in
connection with the dwelling (which would encompass post-access conduct), or narrowly
to protect against discrimination in the provision of services or facilities in connection
with the sale or rental (which would not encompass post-access conduct). The most
natural reading is the former. Courts are “obliged to give effect, if possible, to every
word Congress used.” Reiter v. Sonotone Corp., 442 U.S. 330, 339, 99 S.Ct. 2326, 60
L.Ed.2d 931 (1979). “Services” are frequently provided both in connection with a sale or
rental (e.g., appraisal services or background checks,) and with the dwelling itself (e.g.,
maintenance and security services). On the other hand, it is a strain to imagine
“facilities” provided in association with a real estate transaction (whether sale or rental)
but easy to imagine “facilities” provided in association with continuing use of a dwelling.
This broad interpretation is reinforced by comparing § 3604(b) to § 3604(a).
Section 3604(a) explicitly addresses issues regarding access to housing, stating that it is
unlawful to “refuse to sell or rent … or otherwise make unavailable or deny, a dwelling
to any person because of race, color, religion, sex, familial status, or national origin.”)
Since § 3604(a) explicitly limits itself to access to housing issues and § 3604(b) does not
even mention access, it is fair to infer that Congress intended § 3604(b) to reach conduct
broader than mere access to housing, which was already addressed in § 3604(a).

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This is also the interpretation that best achieves the broad remedial goals of the
Fair Housing Act. The policy of the Fair Housing Act is to provide, “within
constitutional limits, for fair housing throughout the United States.” 42 U.S.C. § 3601.
Denying relief to plaintiffs who have been discriminated against after they were granted
access to housing falls short of this mandate. It is not “fair housing” to charge the same
price for access to everyone on the front end, but to later deny equal access to services
and facilities based on a protected characteristic. A landlord cannot deny access to a
community gym or swimming pool based on a tenant’s race without violating the Fair
Housing Act. A home owner’s association cannot selectively enforce restrictive
covenants based solely on a resident’s religion. And, in this case, a mobile home court
operator cannot impose harsher rental terms or conditions based on a tenant’s national
origin. Because § 3604(b) applies to post-access conduct, and there is no dispute that the
alleged conduct, if found to be true, constitutes discriminatory treatment, Defendant’s
Motion to Dismiss is DENIED as to Plaintiffs’ § 3604(b) claim.
2.

§ 3604(c) and §4-21-601(5)

Section 3604(c) of the Fair Housing Act provides that “it shall be unlawful . . . to make,
print, or publish . . . any notice, statement, or advertisement, with respect to the . . . rental of a
dwelling that indicates any preference, limitation, or discrimination based on race, color,
religion, sex, handicap, familial status, or national origin . . . .” 42 U.S.C. § 3604(c). Section 421-601(5) of the Tennessee Human Rights Act has identical language. Plaintiffs allege that
Defendants violated this statute by depriving them of the benefits of a racially and culturally
diverse environment by the discriminatory exclusion of African-Americans from the MMC
mobile home park. A plaintiff must meet three elements to state a claim under § 3604(c): “(1)

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defendant made a statement; (2) the statement was made with respect to the sale or rental of a
dwelling; and (3) the statement indicated a preference, or limitation or discrimination on the
basis of a protected class.” Miami Valley Fair Hous. Ctr., Inc. v. Connor Grp., 805 F. Supp. 2d
396, 407 (S.D. Ohio 2011) (citing White v. U.S. Dep't of Hous. & Urban Dev., 475 F.3d 898,
904 (7th Cir. 2007)).
The Magistrate Judge concluded that the following sections of Plaintiffs’ Complaint were
sufficient to make out a claim under § 3604(c):
[T]hat the Defendants advertised extensively in Spanish-language print and radio
media in an effort to target Hispanics for exploitative treatment in terms and
conditions of housing at MMC (Am. Compl. ¶¶ 34-36); that as a result of the
purposeful targeting, virtually all of the residents of MMC were Hispanic (Am.
Compl. ¶¶ 34-36); that Defendants actively discouraged African-Americans from
applying for residence at MMC (Am. Compl. ¶ 39); and that the majority of
residents of Shelby County are African-American, yet there are virtually no
African-American residents at MMC and that “it is highly unlikely, if not
impossible, that this situation could exist without discriminatory manipulation of
the resident selection process” (Am. Compl. ¶¶ 37-39).
(ECF No. 95 at 12-13.)
The Magistrate Judge correctly concluded that Plaintiffs stated a plausible claim under §
3604(c). Defendant objects to this conclusion, arguing that Plaintiffs do not offer any facts to
support their claim that Defendant discouraged people of African descent from applying for
residence. It is true that the claim regarding discouragement of African-Americans is a
conclusory allegation, however, Plaintiffs’ § 3604(c) claims are not dependent on this particular
allegation. The Department of Housing and Urban Development’s regulations interpreting §
3604(c) state that “[s]electing media or locations for advertising the sale or rental of dwellings
which deny particular segments of the housing market information about housing opportunities
because of race, color, religion, sex, handicap, familial status, or national origin” is

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discriminatory advertising. 24 C.F.R. § 100.75. Plaintiffs’ allegation that Defendant only
advertised in Spanish language media outlets is sufficient to state a claim because it meets the
Department of Housing and Urban Development’s definition of discriminatory advertisement in
that it denies non-Spanish speaking segments of the housing market, who are overwhelmingly
non-Hispanic, information about housing opportunities. Therefore, Defendants’ Motion to
Dismiss is DENIED as to Plaintiffs’ claims under § 3604(c). Thus, both Counts I and II survive
Defendants’ Motion to Dismiss.
B.

TCPA Claims

Plaintiffs claim that Defendants violated the TCPA in the following ways:
1. Failing to inform applicants for residency that the MMC mobile home park was subject to
flooding;
2. Failing to inform applicants for housing that execution of a RISC or Assumption would
lock the applicant into a long-term lease for the duration of the financing and that they
would not be able to move their mobile homes away from flooding;
3. Executing assumption documents and failing to transfer title to a mobile home to the
purchaser;
4. Creating contrivances to prevent residents from moving mobile homes when they were
legally entitled to do so;
5. Requiring new purchasers to pay property taxes that had accrued prior to their arrival;
6. Trying to collect rental payments when the property was uninhabitable; and
7. Falsely representing that measures would be taken to remedy flooding.
(ECF No. 72, ¶ 490.)
“In order to recover under the TCPA, the plaintiff must prove ‘(1) that the defendant
engaged in an unfair or deceptive act or practice declared unlawful by the TCPA and (2) that the
defendant's conduct caused an ‘ascertainable loss of money or property, real, personal, or mixed,
or any other article or commodity, or thing of value wherever situated . . . .’” Roopchan v. ADT
Sec. Sys., Inc., 781 F. Supp. 2d 636, 656 (E.D. Tenn. 2011) (quoting Tucker v. Sierra Builders,
180 S.W.3d 109, 115 (Tenn. 2005)). An act is “deceptive” if it involves a “material
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representation, practice or omission likely to mislead a reasonable consumer.” Davis v.
McGuigan, 325 S.W.3d 149, 162 (Tenn. 2010) (quoting Ganzevoort v. Russell, 949 S.W.2d 293,
299 (Tenn. 1997)). An act is “unfair” if it “causes or is likely to cause substantial injury to
consumers which is not reasonably avoidable by consumers themselves and not outweighed by
countervailing benefits to consumers or to competition.” Davis, 325 S.W.3d at 162 (quoting
Tucker, 180 S.W.3d at 116–17).
The Magistrate Judge held that Plaintiffs adequately alleged a claim under the TCPA by
specifically stating these alleged acts with particularity, and rejected Defendants’ arguments that
some of the claims were time barred, concluding that the time when Plaintiffs had actual or
constructive knowledge as to the injuries was a question of fact that the Court could not
determine without further factual development. Defendants do not contest the Magistrate
Judge’s finding regarding the sufficiency of the claims, but argue that the Magistrate Judge
should have found some of the claims barred by the statute of limitations.
A plaintiff must bring a TCPA claim within one year of a person’s discovery of the
unlawful act or practice. Tenn. Code Ann. § 47-18-110. The statute of limitations for TCPA
claims begins to run when a plaintiff discovers the injury or when, in the exercise of reasonable
care and diligence, a plaintiff should have discovered it. Power & Telephone Co. v. SunTrust
Bank, 447 F.3d 923, 930 (6th Cir. 2006). Plaintiffs filed the original complaint one year after the
flood, on May 2, 2011. Defendants argue that since some of these events occurred prior to the
flood, Plaintiffs should have discovered the injuries more than one year prior to when they filed
this suit. While it is true that some of these incidents did occur prior to the flood, the Magistrate
Judge correctly held that the issue of constructive knowledge cannot be determined at this point.

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A plaintiff has constructive knowledge of an injury under the TCPA when they are aware
of facts sufficient to put a reasonable person on notice that he has suffered an injury as a result of
wrongful conduct, and the plaintiff knows the identity of the person who engaged in the conduct.
McIntosh v. Blanton, 164 S.W.3d 584, 586 (Tenn. Ct. App. 2004) (quoting Roe v. Jefferson, 875
S.W.2d 653, 656-57 (Tenn. 1994)). Whether a plaintiff exercised reasonable care and diligence
in discovering an injury or wrong is usually a question of fact. Wyatt v. A-Best Co.,910 S.W.2d
851, 854 (Tenn. 1995). That general rule applies in this case as well. It is true that the conduct
on which several of these claims are based occurred prior to the flood (and thus more than one
year before this suit was filed), but there are not sufficient facts in the record to decide as a
matter of law that the plaintiffs not only knew of the conduct, but knew that the conduct injured
them and that the conduct was wrongful. Therefore, the Court adopts the Magistrate Judge’s
recommendations and Defendants’ Motion to Dismiss is DENIED as to the TCPA claims (Count
III).
C.

Breach of the Common Law Duty to Disclose Latent Defects Claim

Sellers of real property have a duty to disclose to buyers any material facts that impact
the property's value and that are not known or reasonably discoverable by a purchaser exercising
ordinary diligence. Fayne v. Vincent, 301 S.W.3d 162, 177 (Tenn. 2009) (citing Simmons v.
Evans, 185 Tenn. 282, 285–86, 206 S.W.2d 295, 296 (Tenn. 1947) and Patel v. Bayliff, 121
S.W.3d 347, 352–53 (Tenn. Ct. App. 2003)). A landlord also has a duty to disclose a “dangerous
condition” (which is functionally the same as a latent defect) if: 1) the condition existed at the
time a tenant executed a lease, 2) the landlord knew or should have known of the condition; and
3) the tenant did not know of the condition and could not have discovered the latent defect
through the exercise of reasonable care. Lethcoe v. Holden, 31 S.W.3d 254, 256 (Tenn. Ct. App.

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2000). Plaintiffs allege that Defendants breached these duties by failing to disclose that the
mobile home park was in a flood zone and had a tendency to flood. The Magistrate Judge held
that whether the propensity for flooding was reasonably discoverable by Plaintiffs cannot be
determined at this time without further factual development, therefore Defendants’ Motion to
Dismiss should be denied as to this claim.
Defendants object to this finding, arguing that, because the property’s location in a flood
plain was publicly available in FEMA flood maps, Plaintiffs had constructive knowledge of the
hazardous condition. The Court disagrees. Whether there was constructive notice of a latent
defect is generally a question of fact. See McCormick v. Warren Cnty. Bd. of Educ., No.
M2011-02261-COA-R3-CV, 2013 WL 167764, at *7 (Tenn. Ct. App. Jan. 15, 2013). It is
plausible that a jury could find that a reasonable buyer should have checked FEMA records
before purchasing a property, but this finding cannot be said to be a foregone conclusion as a
matter of law. Furthermore, knowing that a property is in a flood plain and knowing that a
property has endured several major floods in the recent past are distinctly different things. See,
e.g., Campbell v. Huddleston, E2011-00174-COA-R3CV, 2011 WL 6884233 (Tenn. Ct. App.
Dec. 27, 2011) (holding that buyers could bring a misrepresentation claim when the seller told
them there had been some flooding, but did not disclose the full magnitude of past flooding).
Unlike the buyers in Huddleston, Plaintiffs were not given any notice by Defendants of the
history of flooding, even though Defendants knew the property had endured major floods in the
recent past.3 These are sufficient facts to make out a claim for failure to disclose a latent defect

3

Defendants also argue that they notified residents of past flooding in 2009. However, not all
Plaintiffs lived in the mobile home park in 2009, and, even if they did, it is unclear from the
record if Defendants explained the extent of past flooding in this 2009 notice.
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and therefore the Court adopts the Magistrate Judge’s recommendation and Defendant’s Motion
to Dismiss is DENIED as to the failure to disclose a latent defect claim (Count IV).
D.

Breach of the Common Law Warranty of Habitability Claims

The Magistrate Judge recommended dismissing Plaintiffs’ common law warranty of
habitability claims because such claims only apply to the sale of new property and no Plaintiff
alleged that they purchased new property from Defendants. No party objects to these
recommendations. On clear error review, the Court takes no issue with this analysis. Therefore,
the Court adopts the Magistrate Judge’s recommendation as to this claim and Defendants’
Motion to Dismiss is GRANTED as to Plaintiffs’ breach of the common law warranty of
habitability claim (Count V).
E.

Tennessee Uniform Residential Landlord Tenant Act Claims

The Tennessee Uniform Residential Landlord Tenant Act (“TURLTA”) requires that a
landlord keep premises in a fit and habitable condition and maintain all common areas in a clean
and safe condition. Tenn. Code Ann. § 66-28-304(a)(2); Tenn. Code Ann. § 66-28-304(a)(3).
Plaintiffs allege that Defendants breached warranties of habitability under TURLTA by failing to
keep the common areas in a safe and habitable condition during the flood. Defendants’ initial
argument in their Motion to Dismiss was that the TURLTA did not apply to them because they
did not qualify as “landlords” since they only leased pads upon which mobile homes sat.
Magistrate Judge Pham recommended that Defendants’ Motion to Dismiss be denied as to this
claim because Defendants explicitly identified themselves as landlords in some documents and
because at least one Tennessee court has applied TURLTA to the lease of a lot in a mobile home
park. See R&E Props. v. Jones, No. 03A01-9804-CV-00133, 1999 WL 38282 (Tenn. Ct. App.
Jan. 13, 1999).

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Defendants do not object to this finding, however, they argue instead that they were not
required to maintain common areas in the event of a natural disaster, pursuant to Tenn. Code
Ann. § 66-28-503. The Court agrees. Sections of a statute should be construed together so they
can be applied in harmony and for the specific purposes stated therein. It is a “fundamental
canon of statutory construction that the words of a statute must be read in their context and with
a view to their place in the overall statutory scheme.” Davis v. Michigan Dept. of Treasury, 489
U.S. 803, 809, 109 S.Ct. 1500, 103 L.Ed.2d 891 (1989). If there is an apparent conflict between
two sections of a statute, the more specific provision takes precedence over a general one.
United States v. Kumar, 750 F.3d 563, 568-69 (6th Cir. 2014), cert. denied, ___ U.S. ____, 2014
WL 4647137 (U.S. Oct. 20, 2014) (No. 14-314), (quoting United States v. Perry, 360 F.3d 519,
535 (6th Cir. 2004)). Here, the general statutory requirement to keep premises in a clean, safe,
and habitable condition are preempted by the specific statutory section dealing with the
responsibilities of landlords and plaintiffs when premises are damaged or destroyed by fire or
casualty. See Tenn. Code Ann. § 66-28-503. Since Defendant was not obligated to maintain the
common areas when they were uninhabitable due to casualty, the Motion to Dismiss is
GRANTED as to Plaintiff’s TURLTA claims (Count VI).
F.

Breach of Contract Claims

Plaintiffs allege that Defendants breached contracts by “failing to furnish a lot that is safe
and free from frequent flooding; by raising lot rents within lease periods; by collecting property
taxes that are not owed by residents; and by illegally interfering with resident trailer owners who
attempt to move them; and by entering mobile homes without permission or justification…”
(ECF No. 72, ¶ 498.)

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To establish a claim for breach of contract, a plaintiff must show: (1) the existence of an
enforceable contract; (2) non-performance amounting to a breach of that contract; and (3)
damages caused by the breach. C&W Asset Acquisition, LLC v. Oggs, 230 S.W.3d 671, 676–77
(Tenn. Ct. App. 2007) (citing ARC LifeMed, Inc. v. AMC—Tenn., Inc., 183 S.W.3d 1, 26
(Tenn. Ct. App. 2005)); Thompson v. Am. Gen. Life & Accident Ins. Co., 404 F. Supp. 2d 1023,
1028 (M.D. Tenn. 2005).
Magistrate Judge Pham held that Plaintiffs had met every element for a breach of contract
claim because Plaintiffs allegedly had leases to rent their pads in the mobile home court, and
Defendants allegedly breached those leases by arbitrarily raising rent and forcing at least one
Plaintiff to pay rent when the property was uninhabitable without a set off or abatement. (See
ECF No. 71 ¶¶ 150-51, 206, 230, 264, 313, 373, 403, 429, 455). Defendants object to this
conclusion, arguing that Plaintiffs failed to meet the second element of the test because they did
not identify a specific contractual provision that was breached. See Gant v. Suncom Wireless,
M2002-02574-COA-R3CV, 2003 WL 21170488 (Tenn. Ct. App. May 20, 2003) (dismissing
breach of contract claim when Plaintiff failed to identify a contractual obligation that was
breached). The Court agrees. Plaintiffs allege that Defendants treated them poorly by arbitrarily
raising rent and charging rent when the property was uninhabitable, and claim these actions
constitute a breach of contract, however, Plaintiffs have not alleged that Defendants agreed in the
leases not to do this. This conduct can serve as the basis for other causes of action, but it cannot
establish a claim for breach of contract without identifying a contractual obligation that the
Defendants breached. Therefore, Defendant’s Motion to Dismiss is GRANTED as to the breach
of contract claims (Count VII).
G.

Conversion

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Plaintiffs allege that Defendants committed the tort of conversion by collecting payments
for taxes not owed by Plaintiffs and by entering Plaintiff Guevara’s trailer and removing his
personal property. The Magistrate Judge recommended denying Defendant’s Motion to Dismiss
as to the conversion claim. Neither party objects to this recommendation. On clear error review,
the Magistrate Judge’s recommendation is adopted, and Defendants’ Motion to Dismiss is
DENIED as to Plaintiffs’ conversion claim (Count VIII).
H.

Intentional Misrepresentation

Plaintiffs allege that Defendant Whitten falsely stated to Plaintiffs that there had been no
flooding problems at the mobile home court, and that Plaintiffs purchased mobile homes and
suffered damages based on this information. The Magistrate Judge held that only Plaintiff
Guevara pleaded an intentional misrepresentation claim with sufficient particularity, that there
was a question of fact to be decided as to whether Plaintiff Guevara’s claim was barred by the
statute of limitations, and that therefore Defendant’s Motion to Dismiss the intentional
misrepresentation claims should be denied as to Plaintiff Guevara and granted as to all other
plaintiffs. Neither party objects to these recommendations. On clear error review, the Court
finds no issue with the Magistrate Judge’s analysis and therefore adopts the Magistrate Judge’s
recommendations. Defendants’ Motion to Dismiss is DENIED as to Plaintiff Guevara’s
intentional misrepresentation claim and GRANTED as to all other Plaintiffs’ intentional
misrepresentation claims. (Count IX).
CONCLUSION
For the reasons stated above, Defendants’ Motion to Dismiss is hereby GRANTED as to
the breach of warranty of habitability claims (Count V), the Tennessee Uniform Residential

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Landlord Tenant Act Claims (Count VI), the breach of contract claims (Count VII), and the
intentional misrepresentation claims as to all Plaintiff’s except Guevara (Count IX).
The Defendants’ Motion to Dismiss is hereby DENIED as to the Fair Housing Act and
Tennessee Human Rights Act claims (Counts I and II), the Tennessee Consumer Protection Act
claims (Count III), the breach of the duty to disclose latent defects claims (Count IV), the
conversion claims (Count VIII), and Plaintiff Guevara’s intentional misrepresentation claim
(Count IX).
IT IS SO ORDERED, this 29th day of October, 2014.
/s/ Sheryl H. Lipman
SHERYL H. LIPMAN
UNITED STATES DISTRICT JUDGE

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